Many remember the Nationalist Party spokespersons shaking their heads when Government announced that it was going to pay stimulus and tax refund cheques to the tune of €70 million. They had said that our country could not afford this overspending and warned the deficit would spiral out of control.
Well, we now have the figures for the first three months of 2022 for the deficit in the Consolidated Fund. And surprise, surprise, the Deficit is €158 million, or 30% lower than it had been in the same period of 2021. As usual, the Nationalists’ financial predictions have proven complete hogwash.
Furthermore, available data suggest that while Government had said that the cheques would be to the tune of €70 million, they totalled €74 million. This because eligibility for the cheques was widened so that more women would qualify for them, especially those women without a pension but who had paid contributions in the past.
Eligibility for the cheques was widened so that more women would qualify.
The improvement in the first quarter of the year did not reflect any austerity measures. In fact, government expenditure reached a record high of €1.5 billion, or 4% more than in 2021. This included an increase in capital spending, on a variety of projects such as the Ta’ Qali national park. As a result, capital spending in the first months of 2022 has been nearly 18% higher than before the pandemic.
As forecast by the Finance Minister, and in contrast to the criticism made by the Leader of the Opposition, there was an increase of €218 million in Government revenue, or almost a quarter higher than in 2021. Even if one compares to before the pandemic revenues were €133 million higher.
In fact, income tax collected in the first three months of 2022 was €350 million, or almost a third better than before the pandemic. Social security contributions were 20% better than 2019, and the same can be said for VAT revenue. This confirms that the Maltese economy, although tourism is still much lower than it was before the pandemic, has now reached better overall levels than it had in 2019.
This explains why Government could announce that after May the Wage Supplement will no longer be paid. In turn this will lead to Government finances to improve even further so that it reaches the target of halving the deficit this year while still supporting families to face costs induced by the Ukraine war.